My daughter is always talking about how she hates everything Christmas, including the lights on the houses. I am trying to encourage her that she can like non religious things like the lights, so that she can comfortably live in America.

Sorry to burst your bubble, but the lights are not non-religious. The purpose of the lights is so that santa can find your house. Along with other pagan reasons and and a history of lights decorating the christmas tree.
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aviDec 8 '11 at 7:23

3 Answers
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Based on my research (see below), Christmas lights are entirely secular, and therefore there is no problem whatsoever with looking at or enjoying Christmas lights.

Even if the lights are not entirely secular, there still wouldn't be a problem. The Shach (Shulchan Aruch 142:15), based on Tosfos and the Rosh, writes that it is permitted to derive benefit from decorations that are not directly used in idolatrous practices.

Rabbi Aharon Tendler directly addresses this issue, and rules that one may look at and enjoy Christmas lights, but he doesn't think it's appropriate to do so. His reasoning is as follows (quoted in full; emphasis mine):

The only prohibition to look at Christmas lights might be is they are used for Avodah Zara, and that you are actually benefiting from them by looking at them. Even if we assume that Christianity is Avodah Zara, the lights are not part of their worship, to the best of my knowledge. Also, most lights that are in urban areas, such as in malls and department stores are not part of a religious service at all, but rather used as a way to attract buyers to come shop. Additionally, merely looking at them would not be considered a Hana'ah (benefit). Consequently, there is no Issur to look at Christmas lights if you happen to be passing by them. I don't think that it would be appropriate to specifically stop for the purpose of admiring them, but I'd be hard pressed to find a basis upon which to rule that even that would be forbidden according to Halacha.

The secular nature of the lights continues to this day. As a professor at Yale states,

"One of the key aspects of the American Christmas light display is its secular
nature. Although some people do utilize lighting for religious exaltation — for example
with illuminated outdoor nativity scenes[1] — the vast majority do not directly associate light displays with religion. Christmas lights have maintained many of their original nonreligious meanings..."

([1] Note how he only says that some people use lights to depict religious scenes. The lights themselves are not religious in nature.)

The practice of placing lights on the Christmas tree is older, and while the tree has Christian symbolism, the lights themselves do not.

The first decorated tree was at Riga in Latvia, in 1510. In the early 16th century, Martin Luther is said to have decorated a small Christmas Tree with candles, to show his children how the stars twinkled through the dark night. (Source)

The use of special lights on Christmas originally started with putting small candles on Christmas Trees in the home. Christmas Tree traditions go back to a Germany in the 1500s, and it’s believed the idea to put lights on the trees was started by Martin Luther, a famous priest who was inspired by the prettiness of stars twinkling between evergreens while walking home one night. (Source)

While the general practice of lighting lights in the dead of winter can be connected to pagan Winter Solstice rituals, by this point in time any such association has been completely overwhelmed by the increasingly secular nature of the holiday.

However, in my humble opinion, a Jew should not decorate his own house with such lights at Christmas time, due to issues of "Mar'os Ayin" and "Imitating Gentile Customs."

As an interesting sidenote, there is a not-too-uncommon practice in Israel to decorate the Sukkah with strings of lights - identical to the strings Americans would call "Christmas lights." I don't know what conclusions can or should be gleaned from this observation.

Shmuel, you are wrong. But this isn't Christianity.stackExchange.com The only thing that is wrtting about is the duration for the lights being up, and has nothing to do with what the article states is clearly from way before Thomas Edison was even born!
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aviDec 8 '11 at 10:38

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Any items even associated with Avoda would be asur see Ben Ish Hai Mase 2.
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Hacham GabrielDec 8 '11 at 13:13

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"first building ever lit up with lights in England..." That was for a play, and had nothing to do with Christmas. Thank you for this wonderful discussion. Due to some of your critiques, I have continually revised my answer. I hope that it will be considered satisfactory to the original questioner, and will remain informative for the general public. Have a nice day, Shmuel.
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ShmuelDec 8 '11 at 20:29

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@Shmuel. Calling Martin Luther a "famous priest" is a very impressive bit of understatement.
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TRiGDec 18 '14 at 22:46

It is Mutar to enjoy Christmas lights (see Ben Ish Hai S"B Mase 2 who says that they don't have the din of Avoda Zara, Shulhan Aruch Yoreh Deah 142:15 with Shach). The Ben Ish Hai texts also quote Rav Danzig in Hochmat Adam 87:1 but I don't see that as the actual discussion in the text.
NOTE: this answered was changed from the original.

אסור לשמוע כלי שיר של עבודת כוכבים או להסתכל בנוי עבודת כוכבים, כיון שנהנה בראייה That seems to be talking about objects that are directly used in serving idols. I don't think that includes Christmas lights. Even if they're not entirely secular, Christians don't worship them or directly associate them with idolatry like the Trinity. For example, in the other sections of 142, the Shulchan Aruch talks about knives that were used to slaughter sacrifices to idols, things that were made with parts consecrated to idols. Christmas lights are at best only indirectly related to serving Avoda Zara.
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ShmuelDec 8 '11 at 21:31

נוי means beauty not use of Avoda Zara. It means decorations. Nobody uses decorations to do avoda zara, that's obvious, that's also obvious that Shulhan Aruch was referring to things like xmas lights.
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Hacham GabrielDec 8 '11 at 21:36

I understand that. "Use" was referring to כלי שיר and previous sections in 142. . . I don't think it's that obvious. Seems to me that he's talking about enjoying the beauty of the actual idols. צ"ע
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ShmuelDec 8 '11 at 21:39

Mehila, you are correct. I hope you forgive me. Please look in the Shach who says that it only means things that were worshipped.
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Hacham GabrielDec 8 '11 at 21:43

Christmas lights are a religious symbol. They are not secular. (Though obviously secular people have adopted Christmas lights for their own purposes.)

In this case, you should be learning from your daughter as Malachi 4:6 says will happen. There is no reason why you should be trying to make your daughter feel comfortable with Christian practices, or feel comfortable living in America while the perfectly good option of moving to Israel is available.

On the contrary, Christmas in America has become almost entirely secularized. Heck, the modern-day conception of Santa was pretty much invented by Coca~Cola!
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ShmuelDec 8 '11 at 8:27

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Re Israel: There are 123,000 Christian Arabs living in Israel proper, and more of European descent. (Source: Israeli Ministry of Foreign Affairs). However, their numbers are magnified due to fact that Israel has these large churches, the birthplace of Jesus, and other Christian holy site. Tons of tourist flood into Israel around Christmas-time, seeking the spirituality of the country. Which means that Christmas in Israel is actually far more religious in spirit and character than it is in, say, Brooklyn.
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ShmuelDec 8 '11 at 9:16